What Is Logistics Management Software?

Logistic software is designed to provide logistics providers the necessary tools to support them in the execution and management of their product delivery business. There are basically two sides to this kind of software:

Supply chain management. These are the features that manage the execution of the freight pick-up, tracking and delivery. SCM entails managing all the inventory and transportation details to get the product to its final destination.

Brokerage and bidding. Since most logistics operators serve third parties on a contract basis, freight brokerage software needs to manage the business aspect, too. Freight broker software can include bid and contract management, CRM, accounting and other essential business functions. Because some businesses focus solely on this freight brokerage aspect, there are also specific software solutions, often labeled freight broker or freight forwarder software, which cater directly to these types of operations.

Common Features of Logistics Software

Inventory control

Manages purchase orders and supply levels, tracking the on-hand, allocated and ordered quantities along with historical and trend information for forecasting purposes. Supports order fulfillment, warehouse control and supplier sourcing.

Usually includes barcode or RFID scanning, inventory transfer and smart storage tools to support the warehouse manager in storage location decisions and assistance with picking/packing.

Import/export support

Since many freight carriers deal with international cargo, most systems support you in managing currency exchanges, customs, taxes, multiple languages, trade regulations etc.

Track and Trace

Helps monitor items’ previous and current locations as it moves through the supply chain. “Tracking” refers to items’ current locations, while “tracing” refers to items’ previous locations. Track and trace software relies on barcoding, GPS and radio frequency identification devices to collect this information.

Risk management

Helps make the best out of bad situations by simplifying accident processing, insurance claims, lost freight or other incidents. Can also be used to identify potential areas to mitigate risk—for example, analyzing driver history or hazmat practices.

Integrated accounting

Handles quotes, expenses, billing, invoicing, receivables and even currency transactions to ensure seamless information transfer between the management of freight and payment.

Customer relationship management

Supports sales and marketing practices, as well as help desk and customer satisfaction.

What Type of Buyer Are You?

In our experience, most companies looking for transportation and logistics solutions fall into one of the following categories:

Domestic transport and courier. Smaller businesses dealing primarily with local or domestic goods are generally looking for smaller, simpler systems. Aside from the obvious elimination of the international shipping feature, the warehousing functionality tends to be scaled back as well, designed for ease of use rather than comprehensiveness.

Specialist. This applies to any business that focuses on one particular niche of the SCM industry. For example a shipping company will want detailed transportation functionality; a warehouse will want warehouse and inventory control; a distribution center will want dispatch and delivery. These companies will value best-of-breed solutions that have excellent functionality in their target niche more than they will broad integration across multiple categories.

Private fleet manager. This represents the logistics arm of a larger company, for which SCM is a major and self-run component. These buyers will likely need an ERP-focused solution that easily integrates with the rest of the company’s operations. Example vendors include SAP, Manhattan Associates and RedPrairie. Our fleet management guide offers a list of solutions to help manage data on transportation operations.

Market Trends to Understand

Increase in RFID popularity: This technology has been in use for a while, but with costs coming down it’s gradually becoming more and more accessible to smaller businesses. Since RFID speeds-up inventory transfers much more than barcodes, the prevalence of RFID tracking to increase.

More GPS-reliant features: Receivers like to know where their products are and when they’re going to get there. With the growing availability and popularity of GPS, expect to see more and more features that not only scan barcodes and RFIDs to know when it’s arrived where, but that tell the receiver exactly where that truck, train or ship is in transit.

Better risk management: Between natural disasters, economic disasters, wars and cyber attacks, companies are starting to wake-up to the fact that logistics carries with it a high-level of risk. The most resilient companies are the ones that mitigate risk through diversifying their supply chains, using multiple factories, multiple modes of transportation and plenty of redundancy in communications channels.

Greater compliance tracking: Another aspect of managing risk, many companies are starting to crack down on drivers’ Hours of Service (HOS) compliance by attaching electronic onboard recorders that track the time the vehicle is in operation. Since 2011, the Federal Motor Carrier Safety Administration (FMCSA) has been working to make these devices mandatory for all interstate commercial bus and trucking companies. Although FMCSA’s efforts have met opposition from the Owner-Operator Independent Drivers Association, many companies are already moving in this direction.

More Software-as-a-Service (SaaS) offerings: The entire software industry is moving toward service-based products rather than one-time purchases, and logistics software solutions are no different. Recent trends point toward improving business-to-business connectivity, which is good news for 3PLs and freight forwarders looking to streamline communications with their customers. Many freight management system vendors now offer the option to deploy applications on site or host the systems through the vendors' own servers.